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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/01/22 BJs RESTAURANTS Inc. 10-Q 6/28/22 51:5.5M ActiveDisclosure/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.71M
2: EX-10.1 Material Contract HTML 165K
3: EX-31 Certification -- §302 - SOA'02 HTML 34K
4: EX-32 Certification -- §906 - SOA'02 HTML 18K
10: R1 Document and Entity Information HTML 70K
11: R2 Consolidated Balance Sheets HTML 109K
12: R3 Consolidated Balance Sheets (Parenthetical) HTML 31K
13: R4 Unaudited Consolidated Statements of Operations HTML 95K
14: R5 Unaudited Consolidated Statements of Shareholders' HTML 73K
Equity
15: R6 Unaudited Consolidated Statements of Cash Flows HTML 120K
16: R7 Basis of Presentation HTML 23K
17: R8 Revenue Recognition HTML 53K
18: R9 Leases HTML 46K
19: R10 Long-Term Debt HTML 23K
20: R11 Net Income Per Share HTML 94K
21: R12 Stock-Based Compensation HTML 164K
22: R13 Income Taxes HTML 45K
23: R14 Legal Proceedings HTML 19K
24: R15 Shareholders' Equity HTML 24K
25: R16 Basis of Presentation (Policies) HTML 27K
26: R17 Revenue Recognition (Tables) HTML 51K
27: R18 Leases (Tables) HTML 45K
28: R19 Net Income Per Share (Tables) HTML 91K
29: R20 Stock-Based Compensation (Tables) HTML 161K
30: R21 Income Taxes (Tables) HTML 40K
31: R22 Revenue Recognition - Additional Information HTML 17K
(Detail)
32: R23 Gift Card Liability and Loyalty Program Included HTML 19K
in Accrued Expenses on Consolidated Balance Sheets
(Detail)
33: R24 Revenue Recognized for Redemption of Gift Cards HTML 20K
and Loyalty Rewards Deferred (Detail)
34: R25 Leases - Summary of Lease Costs (Detail) HTML 23K
35: R26 Long-Term Debt - Additional Information (Detail) HTML 57K
36: R27 Reconciliation of Basic and Diluted Net Income Per HTML 50K
Share Computations and Number of Dilutive Equity
Awards Included in Dilutive Net Income Per Share
Computation (Detail)
37: R28 Net Income Per Share - Additional Information HTML 20K
(Detail)
38: R29 Stock-Based Compensation - Additional Information HTML 67K
(Detail)
39: R30 Stock-Based Compensation Recognized within Our HTML 26K
Consolidated Financial Statements (Detail)
40: R31 Black-Scholes Option-Pricing Model, Weighted HTML 25K
Average Assumptions Used to Estimate the Fair
Value of Each Stock Option (Detail)
41: R32 Stock Option Activity (Detail) HTML 42K
42: R33 Time-Based Restricted Stock Unit Activity (Detail) HTML 40K
43: R34 Performance-Based Restricted Stock Unit Activity HTML 40K
(Detail)
44: R35 Income Taxes - Additional Information (Detail) HTML 30K
45: R36 Reconciliation of Beginning and Ending Amount of HTML 25K
Unrecognized Tax Benefits (Detail)
46: R37 Shareholders' Equity - Additional Information HTML 32K
(Detail)
49: XML IDEA XML File -- Filing Summary XML 86K
47: XML XBRL Instance -- bjri-10q_20220628_htm XML 1.09M
48: EXCEL IDEA Workbook of Financial Reports XLSX 74K
6: EX-101.CAL XBRL Calculations -- bjri-20220628_cal XML 107K
7: EX-101.DEF XBRL Definitions -- bjri-20220628_def XML 227K
8: EX-101.LAB XBRL Labels -- bjri-20220628_lab XML 752K
9: EX-101.PRE XBRL Presentations -- bjri-20220628_pre XML 537K
5: EX-101.SCH XBRL Schema -- bjri-20220628 XSD 94K
50: JSON XBRL Instance as JSON Data -- MetaLinks 242± 377K
51: ZIP XBRL Zipped Folder -- 0001564590-22-027242-xbrl Zip 192K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
(Mark One)
|
i ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended i June 28, 2022
OR
|
i ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to ______
Commission file number i 0-21423
iBJ’S RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
|
i California |
i 33-0485615 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
i 7755 Center Avenue, i Suite 300
i Huntington Beach, i California i 92647
( i 714) i 500-2400
Securities registered pursuant to Section 12(b) of the Act:
|
Title of Each Class |
|
Trading Symbol |
|
Name of each exchange on which registered |
|
i Common Stock, No Par Value |
|
i BJRI |
|
i NASDAQ Global Select Market |
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
☑ |
i Large accelerated filer |
|
☐ |
Accelerated filer |
|
☐ |
Non-accelerated filer |
i ☐ |
Smaller reporting company |
|
|
i ☐ |
Emerging growth company |
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes i ☐ No ☑
As of July 29, 2022, there were i 23,454,137 shares of Common Stock of the Registrant outstanding.
BJ’S RESTAURANTS, INC.
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Page |
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PART I. |
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Item 1. |
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Consolidated Balance Sheets – |
1 |
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2 |
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3 |
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4 |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 |
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Item 3. |
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18 |
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Item 4. |
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19 |
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PART II. |
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Item 1. |
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20 |
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Item 1A. |
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20 |
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Item 2. |
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20 |
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Item 6. |
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21 |
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22 |
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
BJ’S RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
|
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||||
|
|
|
(unaudited) |
|
|
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Assets |
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|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
i 37,761 |
|
|
$ |
i 38,527 |
|
|
Accounts and other receivables, net |
|
|
i 22,827 |
|
|
|
i 29,055 |
|
|
Inventories, net |
|
|
i 11,777 |
|
|
|
i 11,579 |
|
|
Prepaid expenses and other current assets |
|
|
i 9,183 |
|
|
|
i 11,654 |
|
|
Total current assets |
|
|
i 81,548 |
|
|
|
i 90,815 |
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
i 500,396 |
|
|
|
i 506,111 |
|
|
Operating lease assets |
|
|
i 369,357 |
|
|
|
i 365,244 |
|
|
Goodwill |
|
|
i 4,673 |
|
|
|
i 4,673 |
|
|
Deferred income taxes |
|
|
i 33,175 |
|
|
|
i 24,902 |
|
|
Other assets, net |
|
|
i 41,966 |
|
|
|
i 43,421 |
|
|
Total assets |
|
$ |
i 1,031,115 |
|
|
$ |
i 1,035,166 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
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|
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Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
i 47,874 |
|
|
$ |
i 48,840 |
|
|
Accrued expenses |
|
|
i 103,688 |
|
|
|
i 112,354 |
|
|
Current operating lease obligations |
|
|
i 39,981 |
|
|
|
i 39,240 |
|
|
Total current liabilities |
|
|
i 191,543 |
|
|
|
i 200,434 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term operating lease obligations |
|
|
i 435,578 |
|
|
|
i 436,016 |
|
|
Long-term debt |
|
|
i 50,000 |
|
|
|
i 50,000 |
|
|
Other liabilities |
|
|
i 13,650 |
|
|
|
i 14,945 |
|
|
Total liabilities |
|
|
i 690,771 |
|
|
|
i 701,395 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, i i 5,000 / shares authorized, i i i i none / / / issued or outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, no par value, i i 125,000 / shares authorized and i i 23,439 / and i i 23,304 / shares issued and outstanding as of June 28, 2022 and December 28, 2021, respectively |
|
|
— |
|
|
|
— |
|
|
Capital surplus |
|
|
i 70,728 |
|
|
|
i 72,513 |
|
|
Retained earnings |
|
|
i 269,616 |
|
|
|
i 261,258 |
|
|
Total shareholders’ equity |
|
|
i 340,344 |
|
|
|
i 333,771 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
i 1,031,115 |
|
|
$ |
i 1,035,166 |
|
See accompanying notes to unaudited consolidated financial statements.
1
BJ’S RESTAURANTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
|
$ |
i 329,697 |
|
|
$ |
i 290,283 |
|
|
$ |
i 628,426 |
|
|
$ |
i 513,590 |
|
|
Restaurant operating costs (excluding depreciation and amortization): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
i 90,928 |
|
|
|
i 75,586 |
|
|
|
i 172,394 |
|
|
|
i 131,735 |
|
|
Labor and benefits |
|
|
i 123,111 |
|
|
|
i 104,218 |
|
|
|
i 239,397 |
|
|
|
i 185,898 |
|
|
Occupancy and operating |
|
|
i 76,560 |
|
|
|
i 67,567 |
|
|
|
i 148,261 |
|
|
|
i 127,395 |
|
|
General and administrative |
|
|
i 16,905 |
|
|
|
i 17,032 |
|
|
|
i 35,158 |
|
|
|
i 32,293 |
|
|
Depreciation and amortization |
|
|
i 17,565 |
|
|
|
i 18,233 |
|
|
|
i 35,541 |
|
|
|
i 36,436 |
|
|
Restaurant opening |
|
|
i 1,045 |
|
|
|
i 721 |
|
|
|
i 1,628 |
|
|
|
i 849 |
|
|
Loss on disposal and impairment of assets |
|
|
i 438 |
|
|
|
i 252 |
|
|
|
i 595 |
|
|
|
i 525 |
|
|
Total costs and expenses |
|
|
i 326,552 |
|
|
|
i 283,609 |
|
|
|
i 632,974 |
|
|
|
i 515,131 |
|
|
Income (loss) from operations |
|
|
i 3,145 |
|
|
|
i 6,674 |
|
|
|
( i 4,548 |
) |
|
|
( i 1,541 |
) |
|
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Other (expense) income: |
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
Interest expense, net |
|
|
( i 436 |
) |
|
|
( i 1,594 |
) |
|
|
( i 1,070 |
) |
|
|
( i 2,996 |
) |
|
Other (expense) income, net |
|
|
( i 187 |
) |
|
|
( i 8 |
) |
|
|
( i 575 |
) |
|
|
i 302 |
|
|
Total other expense |
|
|
( i 623 |
) |
|
|
( i 1,602 |
) |
|
|
( i 1,645 |
) |
|
|
( i 2,694 |
) |
|
Income (loss) before income taxes |
|
|
i 2,522 |
|
|
|
i 5,072 |
|
|
|
( i 6,193 |
) |
|
|
( i 4,235 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
i 2,225 |
|
|
|
( i 1,297 |
) |
|
|
( i 7,950 |
) |
|
|
( i 7,463 |
) |
|
Net income |
|
$ |
i 297 |
|
|
$ |
i 6,369 |
|
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$ |
i 1,757 |
|
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$ |
i 3,228 |
|
|
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Net income per share: |
|
|
|
|
|
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|
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Basic |
|
$ |
i 0.01 |
|
|
$ |
i 0.27 |
|
|
$ |
i 0.08 |
|
|
$ |
i 0.14 |
|
|
Diluted |
|
$ |
i 0.01 |
|
|
$ |
i 0.26 |
|
|
$ |
i 0.07 |
|
|
$ |
i 0.13 |
|
|
|
|
|
|
|
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|
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|
|
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|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
i 23,434 |
|
|
|
i 23,247 |
|
|
|
i 23,405 |
|
|
|
i 23,087 |
|
|
Diluted |
|
|
i 23,576 |
|
|
|
i 24,252 |
|
|
|
i 23,658 |
|
|
|
i 24,083 |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
See accompanying notes to unaudited consolidated financial statements.
2
BJ’S RESTAURANTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
|
|
|
For the Thirteen Weeks Ended |
|
|||||||||||||||||
|
|
|
Common Stock |
|
|
Capital |
|
|
Retained |
|
|
|
|
|
|||||||
|
|
|
Shares |
|
|
Amount |
|
|
Surplus |
|
|
Earnings |
|
|
Total |
|
|||||
|
Balance, March 30, 2021 |
|
|
i 23,219 |
|
|
$ |
— |
|
|
$ |
i 67,289 |
|
|
$ |
i 257,994 |
|
|
$ |
i 325,283 |
|
|
Exercise of stock options |
|
|
i 28 |
|
|
|
i 1,202 |
|
|
|
( i 301 |
) |
|
|
— |
|
|
|
i 901 |
|
|
Issuance of common stock |
|
|
— |
|
|
|
( i 50 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 50 |
) |
|
Issuance of restricted stock units |
|
|
i 20 |
|
|
|
i 901 |
|
|
|
( i 915 |
) |
|
|
— |
|
|
|
( i 14 |
) |
|
Reclassification of common stock |
|
|
— |
|
|
|
( i 2,053 |
) |
|
|
— |
|
|
|
i 2,053 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
i 2,640 |
|
|
|
— |
|
|
|
i 2,640 |
|
|
Adjustment to dividends previously accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 5 |
|
|
|
i 5 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 6,369 |
|
|
|
i 6,369 |
|
|
Balance, June 29, 2021 |
|
|
i 23,267 |
|
|
$ |
— |
|
|
$ |
i 68,713 |
|
|
$ |
i 266,421 |
|
|
$ |
i 335,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 29, 2022 |
|
|
i 23,416 |
|
|
$ |
— |
|
|
$ |
i 69,326 |
|
|
$ |
i 268,336 |
|
|
$ |
i 337,662 |
|
|
Issuance of restricted stock units |
|
|
i 23 |
|
|
|
i 978 |
|
|
|
( i 978 |
) |
|
|
— |
|
|
|
— |
|
|
Reclassification of common stock |
|
|
— |
|
|
|
( i 978 |
) |
|
|
— |
|
|
|
i 978 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
i 2,380 |
|
|
|
— |
|
|
|
i 2,380 |
|
|
Adjustment to dividends previously accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 5 |
|
|
|
i 5 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 297 |
|
|
|
i 297 |
|
|
Balance, June 28, 2022 |
|
|
i 23,439 |
|
|
$ |
— |
|
|
$ |
i 70,728 |
|
|
$ |
i 269,616 |
|
|
$ |
i 340,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||||||||||||||
|
|
|
Common Stock |
|
|
Capital |
|
|
Retained |
|
|
|
|
|
|||||||
|
|
|
Shares |
|
|
Amount |
|
|
Surplus |
|
|
Earnings |
|
|
Total |
|
|||||
|
Balance, December 29, 2020 |
|
|
i 22,318 |
|
|
$ |
— |
|
|
$ |
i 71,722 |
|
|
$ |
i 222,066 |
|
|
$ |
i 293,788 |
|
|
Exercise of stock options |
|
|
i 122 |
|
|
|
i 6,394 |
|
|
|
( i 1,883 |
) |
|
|
— |
|
|
|
i 4,511 |
|
|
Issuance of common stock |
|
|
i 704 |
|
|
|
i 28,907 |
|
|
|
— |
|
|
|
— |
|
|
|
i 28,907 |
|
|
Issuance of restricted stock units |
|
|
i 123 |
|
|
|
i 5,816 |
|
|
|
( i 6,281 |
) |
|
|
— |
|
|
|
( i 465 |
) |
|
Reclassification of common stock |
|
|
— |
|
|
|
( i 41,117 |
) |
|
|
— |
|
|
|
i 41,117 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
i 5,155 |
|
|
|
— |
|
|
|
i 5,155 |
|
|
Adjustment to dividends previously accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 10 |
|
|
|
i 10 |
|
|
Net Income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 3,228 |
|
|
|
i 3,228 |
|
|
Balance, June 29, 2021 |
|
|
i 23,267 |
|
|
$ |
— |
|
|
$ |
i 68,713 |
|
|
$ |
i 266,421 |
|
|
$ |
i 335,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 28, 2021 |
|
|
i 23,304 |
|
|
$ |
— |
|
|
$ |
i 72,513 |
|
|
$ |
i 261,258 |
|
|
$ |
i 333,771 |
|
|
Issuance of restricted stock units |
|
|
i 135 |
|
|
|
i 6,593 |
|
|
|
( i 6,953 |
) |
|
|
— |
|
|
|
( i 360 |
) |
|
Reclassification of common stock |
|
|
— |
|
|
|
( i 6,593 |
) |
|
|
— |
|
|
|
i 6,593 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
i 5,168 |
|
|
|
— |
|
|
|
i 5,168 |
|
|
Adjustment to dividends previously accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 8 |
|
|
|
i 8 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 1,757 |
|
|
|
i 1,757 |
|
|
Balance, June 28, 2022 |
|
|
i 23,439 |
|
|
$ |
— |
|
|
$ |
i 70,728 |
|
|
$ |
i 269,616 |
|
|
$ |
i 340,344 |
|
See accompanying notes to unaudited consolidated financial statements.
3
BJ’S RESTAURANTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
i 1,757 |
|
|
$ |
i 3,228 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
i 35,541 |
|
|
|
i 36,436 |
|
|
Non-cash lease expense |
|
|
i 16,585 |
|
|
|
i 15,419 |
|
|
Amortization of financing costs |
|
|
i 109 |
|
|
|
i 283 |
|
|
Deferred income taxes |
|
|
( i 8,273 |
) |
|
|
( i 7,701 |
) |
|
Stock-based compensation expense |
|
|
i 4,999 |
|
|
|
i 4,983 |
|
|
Loss on disposal and impairment of assets |
|
|
i 595 |
|
|
|
i 525 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts and other receivables |
|
|
i 7,557 |
|
|
|
( i 1,432 |
) |
|
Inventories, net |
|
|
i 95 |
|
|
|
i 58 |
|
|
Prepaid expenses and other current assets |
|
|
i 2,052 |
|
|
|
i 1,574 |
|
|
Other assets, net |
|
|
( i 810 |
) |
|
|
i 5 |
|
|
Accounts payable |
|
|
( i 5 |
) |
|
|
i 9,337 |
|
|
Accrued expenses |
|
|
( i 8,596 |
) |
|
|
i 11,859 |
|
|
Operating lease obligations |
|
|
( i 20,099 |
) |
|
|
( i 21,335 |
) |
|
Other liabilities |
|
|
( i 1,295 |
) |
|
|
i 259 |
|
|
Net cash provided by operating activities |
|
|
i 30,212 |
|
|
|
i 53,498 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
( i 31,119 |
) |
|
|
( i 14,291 |
) |
|
Proceeds from sale of assets |
|
|
i 566 |
|
|
|
i 21 |
|
|
Net cash used in investing activities |
|
|
( i 30,553 |
) |
|
|
( i 14,270 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Borrowings on line of credit |
|
|
i 320,000 |
|
|
|
i 697,600 |
|
|
Payments on line of credit |
|
|
( i 320,000 |
) |
|
|
( i 732,600 |
) |
|
Payments of debt issuance costs |
|
|
( i 3 |
) |
|
|
( i 315 |
) |
|
Proceeds from issuance of common stock, net |
|
|
— |
|
|
|
i 28,907 |
|
|
Taxes paid on vested stock units under employee plans |
|
|
( i 360 |
) |
|
|
( i 938 |
) |
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
i 4,511 |
|
|
Cash dividends accrued under stock compensation plans |
|
|
( i 62 |
) |
|
|
( i 82 |
) |
|
Net cash used in financing activities |
|
|
( i 425 |
) |
|
|
( i 2,917 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
( i 766 |
) |
|
|
i 36,311 |
|
|
Cash and cash equivalents, beginning of period |
|
|
i 38,527 |
|
|
|
i 51,664 |
|
|
Cash and cash equivalents, end of period |
|
$ |
i 37,761 |
|
|
$ |
i 87,975 |
|
See accompanying notes to unaudited consolidated financial statements.
4
BJ’S RESTAURANTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
i 469 |
|
|
$ |
i 292 |
|
|
Cash paid for interest, net of capitalized interest |
|
$ |
i 631 |
|
|
$ |
i 2,457 |
|
|
Cash paid for operating lease obligations |
|
$ |
i 33,238 |
|
|
$ |
i 35,348 |
|
|
Supplemental disclosure of non-cash operating, investing and financing activities: |
|
|
|
|
|
|||
|
Operating lease assets obtained in exchange for operating lease obligations |
|
$ |
i 22,118 |
|
|
$ |
i 7,704 |
|
|
Tenant improvement allowance receivable |
|
$ |
i 1,600 |
|
|
$ |
i 4,163 |
|
|
Property and equipment acquired and included in accounts payable |
|
$ |
i 7,260 |
|
|
$ |
i 707 |
|
|
Stock-based compensation capitalized |
|
$ |
i 169 |
|
|
$ |
i 172 |
|
See accompanying notes to unaudited consolidated financial statements.
5
BJ’S RESTAURANTS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
i1. BASIS OF PRESENTATION
iThe accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The consolidated financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations, shareholders’ equity and cash flows for the periods presented. Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules.
The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates. Our operating results for the twenty-six weeks ended June 28, 2022 may not be indicative of operating results for the entire year.
A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended December 28, 2021. The disclosures included in our accompanying interim consolidated financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission.
iCOVID-19 Pandemic Update
The COVID-19 pandemic has adversely affected, and is expected to continue to adversely affect, our operations and financial results for the foreseeable future. We continue to monitor the progression of the COVID-19 pandemic and state, local and federal government regulatory and public health responses thereto. As of the date of this report, most of our restaurants were operating with few, if any, restrictions. However, it is possible additional outbreaks could require us to reduce our capacity, implement social distancing, or further suspend our in-restaurant dining operations. Our restaurant performance could be adversely affected if we are required by law to have guests present evidence of vaccination or negative tests in a significant number of jurisdictions. There is also no guarantee that state and local jurisdictions that have eased restrictions will not later reverse or roll-back the restrictions, as many have done in the past. Additionally, our restaurant operations have been and could continue to be disrupted by employee (referred to as “team member”) staffing issues because of illness, exclusion, fear of contracting COVID-19 or caring for family members due to COVID-19, legal requirements for team member vaccinations or COVID testing, lack of labor supply, competitive labor pressures, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced material disruptions in our supply chain due to COVID-19, we could see material future disruptions should the impacts of COVID-19 continue. For more information regarding the risks to our business relating to the COVID-19 pandemic, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2021.
/ i
2. REVENUE RECOGNITION
Our revenues are comprised of food and beverage sales from our restaurants. Revenues from restaurant sales are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. We sell gift cards which do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and are recognized as gift card “breakage” over time. Estimated gift card breakage is recorded as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to government authorities. The estimated gift card breakage is based on when the likelihood of redemption becomes remote, which has typically been approximately i 24 months after the original gift card issuance date.
Our “BJ’s Premier Rewards Plus” customer loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points, less expected expirations, until such points are redeemed.
/
6
i
The liability related to our gift card and loyalty program, included in “Accrued expenses” on our Consolidated Balance Sheets is as follows (in thousands):
|
|
|
|
|
|
||||
|
Gift card liability |
|
$ |
i 14,253 |
|
|
$ |
i 19,499 |
|
|
Deferred loyalty revenue |
|
$ |
i 3,522 |
|
|
$ |
i 3,949 |
|
i
Revenue recognized for the redemption of gift cards and loyalty rewards deferred at the beginning of each respective fiscal year is as follows (in thousands):
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenue recognized from gift card liability |
|
$ |
i 1,887 |
|
|
$ |
i 1,843 |
|
|
$ |
i 8,568 |
|
|
$ |
i 6,743 |
|
|
Revenue recognized from customer loyalty program |
|
$ |
i 1,209 |
|
|
$ |
i 1,378 |
|
|
$ |
i 5,314 |
|
|
$ |
i 6,926 |
|
/ i
3. LEASES
We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. U.S. GAAP requires that our leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date, and the lease term used in the evaluation includes the non-cancellable period for which we have the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All of our restaurant leases and office space are classified as operating leases. We do not have any finance leases.
iLease costs included in “Occupancy & operating” on the Consolidated Statements of Operations consisted of the following (in thousands):
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Lease cost |
|
$ |
i 14,827 |
|
|
$ |
i 14,378 |
|
|
$ |
i 29,662 |
|
|
$ |
i 28,587 |
|
|
Variable lease cost |
|
|
i 1,037 |
|
|
|
i 469 |
|
|
|
i 1,745 |
|
|
|
i 602 |
|
|
Total lease costs |
|
$ |
i 15,864 |
|
|
$ |
i 14,847 |
|
|
$ |
i 31,407 |
|
|
$ |
i 29,189 |
|
/ i
4. LONG-TERM DEBT
Line of Credit
On i November 3, 2021, we entered into a Fourth Amended and Restated Credit Agreement (“Credit Facility”) with Bank of America, N.A. (“BofA”), JPMorgan Chase Bank, N.A., and certain other parties to amend and restate our revolving line of credit (the “Line of Credit”) to improve the pricing, extend the maturity date, change the interest reference rate, eliminate certain financial covenants and conditions, and reset other financial covenants starting with the fourth quarter of 2021.
Our Credit Facility matures on i November 3, 2026, and provides us with revolving loan commitments totaling $ i 215 million, which may be increased up to $ i 315 million, of which $ i 50 million may be used for the issuance of letters of credit. Availability under the Credit Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. On June 28, 2022, there were borrowings of $ i 50.0 million and letters of credit of $ i 17.1 million outstanding, leaving $ i 147.9 million available to borrow.
Borrowings under the Line of Credit bear interest at an annual rate equal to either (a) the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus a percentage not to exceed i 2.00% (with a floor on BSBY of 0.00%), or (b) a percentage not to exceed i 1.00% above a Base Rate equal to the highest of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) BofA’s Prime Rate, (iii) the i BSBY rate plus 1.00%, and (iv) 1.00%, in either case depending on the level of lease and debt obligations of the Company as compared to EBITDA plus lease expenses. The weighted average interest rate during the twenty-six weeks ended June 28, 2022 was approximately i 2.2%.
i The Credit Facility is secured by the Company’s assets and contains provisions requiring us to maintain compliance with certain covenants, including a Fixed Charge Coverage Ratio and a Lease Adjusted Leverage Ratio. At June 28, 2022, we were in compliance with these covenants.
Pursuant to the Line of Credit, we are required to pay certain customary fees and expenses associated with maintenance and use of the Line of Credit, including letter of credit issuance fees, unused commitment fees and interest on the Line of Credit, which are payable monthly. Interest expense and commitment fees under the Credit Facility were approximately $ i 1.1 million and $ i 3.0 million, for the
/7
twenty-six weeks ended June 28, 2022 and June 29, 2021, respectively. We also capitalized approximately $ i 90,000 and $ i 40,000 of interest expense related to new restaurant construction during each of the twenty-six weeks ended June 28, 2022 and June 29, 2021.
i
5. NET INCOME PER SHARE
i Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if in-the-money stock options issued by us to sell common stock at set prices were exercised and if restrictions on restricted stock units (“RSUs”) issued by us were to lapse (collectively, equity awards) using the treasury stock method. Performance-based RSUs are considered contingent shares; therefore, at each reporting date we determine the probable number of shares that will vest and we include these contingently issuable shares in our diluted net income calculation. Once these performance-based RSUs vest, they are included in our basic net income per share calculation.
iThe following table presents a reconciliation of basic and diluted net income per share, including the number of dilutive equity awards that were included in the dilutive net income per share computation (in thousands):
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
i 297 |
|
|
$ |
i 6,369 |
|
|
$ |
i 1,757 |
|
|
$ |
i 3,228 |
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding – basic |
|
|
i 23,434 |
|
|
|
i 23,247 |
|
|
|
i 23,405 |
|
|
|
i 23,087 |
|
|
Dilutive effect of equity awards |
|
|
i 142 |
|
|
|
i 1,005 |
|
|
|
i 253 |
|
|
|
i 996 |
|
|
Weighted-average shares outstanding – diluted |
|
|
i 23,576 |
|
|
|
i 24,252 |
|
|
|
i 23,658 |
|
|
|
i 24,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
i 0.01 |
|
|
$ |
i 0.27 |
|
|
$ |
i 0.08 |
|
|
$ |
i 0.14 |
|
|
Diluted |
|
$ |
i 0.01 |
|
|
$ |
i 0.26 |
|
|
$ |
i 0.07 |
|
|
$ |
i 0.13 |
|
For the thirteen weeks ended June 28, 2022 and June 29, 2021, there were approximately i 2.2 million and i 0.2 million shares of equity awards and warrants, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive. For the twenty-six weeks ended June 28, 2022 and June 29, 2021, there were approximately i 2.0 million and i 0.2 million shares of equity awards and warrants, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive.
/i
6. STOCK-BASED COMPENSATION
Our current shareholder approved stock-based compensation plan is the BJ’s Restaurants, Inc. Equity Incentive Plan, (as amended from time to time, “the Plan”). Under the Plan, we may issue shares of our common stock to team members, officers, directors and consultants. We have historically granted incentive stock options, non-qualified stock options, restricted stock and performance and time-based restricted stock units. Stock options are charged against the Plan share reserve on the basis of i i one / share for each share granted. All options granted under the Plan expire within i 10 years of their date of grant. Grants of restricted stock, RSUs, performance shares and performance units, if any, are currently charged against the Plan share reserve on the basis of i 1.5 shares for each share granted. The Plan also contains other limits on the terms of incentive grants such as limits on the number that can be granted to a team member during any fiscal year.
Under the Plan, we issue time-based and performance-based RSUs and non-qualified stock options to vice presidents and above on an annual basis, as well as new hires who are given the option between receiving their full grant as a time-based RSU or split evenly between non-qualified stock options and time-based RSUs. We issue time-based RSUs to other select support team members, and we issue time-based RSUs to non-employee members of our Board of Directors. We also issue RSUs, and previously issued non-qualified stock options, in connection with the BJ’s Gold Standard Stock Ownership Program (the “GSSOP”). The GSSOP is a long-term equity incentive program for our restaurant general managers, executive kitchen managers, directors of operations and directors of kitchen operations. GSSOP grants are dependent on the length of each participant’s service with us and position. All GSSOP participants are required to remain in good standing during their vesting period.
/8
i The Plan permits our Board of Directors to set the vesting terms and exercise period for awards at their discretion; however, the grant of awards with no minimum vesting period or a vesting period less than one year may not exceed 5% of the total number of shares authorized under the Plan. Stock options and time-based RSUs vest ratably over one, three or i five years for non-GSSOP participants and either cliff vest at three or i five years or cliff vest at i 33% on the third anniversary and i 67% on the fifth anniversary for GSSOP participants. Performance-based RSUs generally cliff vest on the third anniversary of the grant date in an amount from i 0% to i 225% of the grant quantity, dependent on the level of performance target achievement.
On January 15, 2021, our Board of Directors approved special fully-vested restricted stock grants, in lieu of cash bonuses to Restaurant Support Center team members at the Vice President and Director levels. These grants were in amounts designed to approximate a portion of their potential incentive compensation, which was approximately $ i 0.5 million.
iThe following table presents the stock-based compensation recognized within our consolidated financial statements (in thousands):
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Labor and benefits |
|
$ |
i 640 |
|
|
$ |
i 723 |
|
|
$ |
i 1,390 |
|
|
$ |
i 1,531 |
|
|
General and administrative |
|
$ |
i 1,648 |
|
|
$ |
i 1,842 |
|
|
$ |
i 3,609 |
|
|
$ |
i 3,452 |
|
|
Capitalized (1) |
|
$ |
i 93 |
|
|
$ |
i 75 |
|
|
$ |
i 169 |
|
|
$ |
i 172 |
|
|
|
(1) |
Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets. |
Stock Options
iThe fair value of each stock option was estimated on the grant date using the Black‑Scholes option-pricing model with the following weighted average assumptions:
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
Expected volatility |
|
|
i 63.2 |
% |
|
|
i 60.4 |
% |
|
Risk-free interest rate |
|
|
i 1.6 |
% |
|
|
i 0.5 |
% |
|
Expected option life |
|
i 5 years |
|
|
i 5 years |
|
||
|
Dividend yield |
|
|
— |
% |
|
|
— |
% |
|
Fair value of options granted |
|
$ |
i 17.35 |
|
|
$ |
i 23.78 |
|
U.S. GAAP requires us to make certain assumptions and estimates regarding the grant date fair value. These include expected volatility, risk-free interest rate, expected option life, and dividend yield. These assumptions and estimates are determined using inputs that, in many cases, are outside of our control. Changes in these assumptions and estimates, including stock price volatility, dividend yield and risk-free interest rate, may significantly impact the fair value of future grants resulting in a significant impact to our financial results.
i Under our stock-based compensation plan the exercise price of a stock option is required to equal or exceed the fair value of our common stock at market close on the option grant date or the most recent trading day when grants take place on market holidays. The following table presents stock option activity:
|
|
|
Options Outstanding |
|
|
Options Exercisable |
|
||||||||||
|
|
|
Shares (in thousands) |
|
|
Weighted Average Exercise Price |
|
|
Shares (in thousands) |
|
|
Weighted Average Exercise Price |
|
||||
|
Outstanding at December 28, 2021 |
|
|
i 775 |
|
|
$ |
i 41.77 |
|
|
|
i 519 |
|
|
$ |
i 41.02 |
|
|
Granted |
|
|
i 100 |
|
|
|
i 32.19 |
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
( i 34 |
) |
|
|
i 40.98 |
|
|
|
|
|
|
|
|
|
|
Outstanding at June 28, 2022 |
|
|
i 841 |
|
|
$ |
i 40.67 |
|
|
|
i 623 |
|
|
$ |
i 41.59 |
|
As of June 28, 2022, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $ i 2.7 million, which is generally expected to be recognized over the next i three years.
9
Restricted Stock Units
Time-Based Restricted Stock Units
iThe following table presents time-based restricted stock unit activity:
|
|
|
Shares (in thousands) |
|
|
Weighted Average Fair Value |
|
||
|
Outstanding at December 28, 2021 |
|
|
i 619 |
|
|
$ |
i 39.35 |
|
|
Granted |
|
|
i 218 |
|
|
|
i 31.06 |
|
|
Released |
|
|
( i 119 |
) |
|
|
i 43.36 |
|
|
Forfeited |
|
|
( i 45 |
) |
|
|
i 36.58 |
|
|
Outstanding at June 28, 2022 |
|
|
i 673 |
|
|
$ |
i 36.13 |
|
/
The fair value of time-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each time-based RSU is expensed over the vesting period (e.g., one, three or five years). As of June 28, 2022, total unrecognized stock-based compensation expense related to non-vested RSUs was approximately $ i 12.7 million, which is generally expected to be recognized over the next i five years.
Performance-Based Restricted Stock Units
iThe following table presents performance-based restricted stock unit activity:
|
|
|
Shares (in thousands) |
|
|
Weighted Average Fair Value |
|
||
|
Outstanding at December 28, 2021 |
|
|
i 112 |
|
|
$ |
i 45.60 |
|
|
Granted |
|
|
i 52 |
|
|
|
i 32.27 |
|
|
Released |
|
|
( i 27 |
) |
|
|
i 53.22 |
|
|
Forfeited |
|
|
( i 14 |
) |
|
|
i 40.06 |
|
|
Outstanding at June 28, 2022 |
|
|
i 123 |
|
|
$ |
i 38.89 |
|
The fair value of performance-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each performance-based RSU is expensed, based on management’s current estimate of the level that the performance goal will be achieved. As of June 28, 2022, based on the target level of performance, the total unrecognized stock-based compensation expense related to non-vested performance-based RSUs was approximately $ i 3.1 million, which is generally expected to be recognized over the next i three years.
i
7. INCOME TAXES
We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting” and ASC Topic 740, “Accounting for Income Taxes.” The related tax expense or benefit is recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained or the tax environment changes.
Our effective income tax benefit rate for the twenty-six weeks ended June 28, 2022 was i 128.4% compared to a benefit of i 176.2% for the comparable twenty-six week period of 2021. The effective tax rate benefit for the twenty-six weeks ended June 28, 2022 and June 29, 2021, was different from the statutory tax rate primarily as a result of significant FICA tax tip credits.
As of June 28, 2022, we had unrecognized tax benefits of approximately $ i 1.2 million, of which approximately $ i 1.1 million, if reversed, would impact our effective tax rate.
/10
i
A reconciliation of the beginning and ending amount of unrecognized tax benefits is the following (in thousands):
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
Beginning gross unrecognized tax benefits |
|
$ |
i 1,198 |
|
|
$ |
i 1,333 |
|
|
Increases for tax positions taken in prior years |
|
|
i 3 |
|
|
|
— |
|
|
Decreases for tax positions taken in prior years |
|
|
( i 1 |
) |
|
|
— |
|
|
Increases for tax positions taken in the current year |
|
|
i 22 |
|
|
|
i 43 |
|
|
Ending gross unrecognized tax benefits |
|
$ |
i 1,222 |
|
|
$ |
i 1,376 |
|
Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of June 28, 2022, the earliest tax year still subject to examination by the Internal Revenue Service is i 2015. The earliest year still subject to examination by a significant state or local taxing jurisdiction is i 2017.
i
8. LEGAL PROCEEDINGS
We are subject to lawsuits, administrative proceedings and demands that arise in the ordinary course of our business and which typically involve claims from guests, team members and others related to operational, employment, real estate and intellectual property issues common to the foodservice industry. A number of these claims may exist at any given time. We are self-insured for a portion of our general liability, team member workers’ compensation and employment practice liability insurance requirements. We maintain coverage with a third-party insurer to limit our total exposure. We believe that most of our team member claims will be covered by our general liability insurance, subject to coverage limits and the portion of such claims that are self-insured. Punitive damages awards and team member unfair practice claims, however, are not covered by our general liability insurance. To date, we have not been ordered to pay punitive damages with respect to any claims, but there can be no assurance that punitive damages will not be awarded with respect to any future claims. We could be affected by adverse publicity resulting from allegations in lawsuits, claims and proceedings, regardless of whether these allegations are valid or whether we are ultimately determined to be liable. We currently believe that the final disposition of these type of lawsuits, proceedings and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.
i
9. SHAREHOLDERS’ EQUITY
At-the-Market Offering
On January 21, 2021, we sold i 703,399 shares of our common stock at $ i 42.65 per share for cash proceeds of $ i 30.0 million (before commission and other fees) through an “at-the market” (“ATM”) offering program. As a result of the anti-dilution provisions contained in ACT III’s warrant, the number of shares issuable upon exercise of such warrant was adjusted to i 876,949 and the exercise price was adjusted to $ i 26.94.
Stock Repurchases
As of June 28, 2022, we have approximately $ i 24.4 million remaining under the current $ i 500 million share repurchase plan approved by our Board of Directors. Repurchases may be made at any time.
Cash Dividends
Due to the COVID-19 pandemic, our Board of Directors suspended quarterly cash dividends until it is determined that resumption of dividend payments is in the best interest of the Company and its shareholders. As such, the only cash dividends paid during the twenty-six weeks ended June 28, 2022 were related to dividends (declared prior to fiscal 2020) which vested under our stock compensation plans.
/
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE
Certain information included in this Form 10-Q and other filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers may contain “forward-looking” statements about our current and expected performance trends, growth plans, business goals and other matters. Words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions are intended to identify “forward-looking” statements. These statements, and any other statements that are not historical facts, are “forward-looking” statements within the meaning of the Private
11
Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended from time to time (the “Act”). The cautionary statements made in this Form 10-Q should be read as being applicable to all related “forward-looking” statements wherever they appear in this Form 10-Q. These forward-looking statements are based on information available to us as of the date any such statements are made, and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the risk factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2021, as updated in our Form 10-Q for the twenty-six weeks ended June 28, 2022 and in other reports filed subsequently with the SEC.
GENERAL
As of August 1, 2022, we own and operate 214 restaurants located in 29 states. Our proprietary craft beer is produced at several of our locations, our Temple, Texas brewpub locations and by independent third-party brewers using our proprietary recipes.
The first BJ’s restaurant, which opened in 1978 in Orange County, California, was a small sit-down pizzeria that featured Chicago style deep-dish pizza with a unique California twist. Our goal then and still today is to be a leading, varied menu casual dining restaurant brand that focuses on delivering high quality menu options at a compelling value, a dining experience that exceeds our guests’ expectations for service, hospitality and enjoyment, and an atmosphere that is always welcoming and approachable.
In 1996, we introduced our own proprietary craft beers and expanded the BJ’s concept from its beginnings as a small pizzeria to a full-service, high-energy casual dining restaurant when we opened our first large format restaurant with our own internal brewing operations in Brea, California. Today our restaurants feature a broad menu with over 100 menu items designed to offer something for everyone including: slow roasted entrees such as prime rib, EnLIGHTened Entrees® such as our Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, the world-famous Pizookie® dessert, and our award-winning BJ’s proprietary craft beers.
Our revenues are comprised of food and beverage sales from our restaurants. Revenues from restaurant sales are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. We sell gift cards which do not have an expiration date, and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and will be recognized as gift card “breakage” over time. Estimated gift card breakage is recorded as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to government authorities. The estimated gift card breakage is based on when the likelihood of redemption becomes remote, which has typically been 24 months after the original gift card issuance date.
Our guest loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points until such points are redeemed.
All of our restaurants are Company-owned. In calculating comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. Guest traffic for our restaurants is estimated based on guest checks.
Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders. The components of cost of sales are variable and typically fluctuate directly with sales volumes, but may be impacted by changes in commodity prices, a shift in sales mix to higher cost proteins or other higher cost items, or varying levels of promotional activities.
Labor and benefit costs include direct hourly and management wages, bonuses, payroll taxes, fringe benefits and stock-based compensation and workers’ compensation expense that is directly related to restaurant level team members.
Occupancy and operating expenses include restaurant supplies, credit card fees, third-party delivery company commissions, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related restaurant costs. Since fiscal 2020, occupancy and operating expense also include COVID-19 related costs such as temporary patios and safety related items.
General and administrative costs include all corporate administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include corporate management, field supervision and corporate hourly staff salaries and related team member benefits (including stock-based compensation expense and cash-based incentive compensation), travel and relocation costs, information systems, the cost to recruit and train new restaurant management team members, corporate rent, certain brand marketing-related expenses and legal, professional and consulting fees.
Depreciation and amortization are composed primarily of depreciation of capital expenditures for restaurant and brewing equipment and leasehold improvements.
12
Restaurant opening expenses, which are expensed as incurred, consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stock of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period.
RESULTS OF OPERATIONS
The following table provides, for the periods indicated, our unaudited Consolidated Statements of Operations expressed as percentages of total revenues. The results of operations for the thirteen and twenty-six weeks ended June 28, 2022 and June 29, 2021, are not necessarily indicative of the results to be expected for the full fiscal year. Percentages below may not reconcile due to rounding.
|
|
|
For the Thirteen Weeks Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Restaurant operating costs (excluding depreciation and amortization): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
27.6 |
|
|
|
26.0 |
|
|
|
27.4 |
|
|
|
25.6 |
|
|
Labor and benefits |
|
|
37.3 |
|
|
|
35.9 |
|
|
|
38.1 |
|
|
|
36.2 |
|
|
Occupancy and operating |
|
|
23.2 |
|
|
|
23.3 |
|
|
|
23.6 |
|
|
|
24.8 |
|
|
General and administrative |
|
|
5.1 |
|
|
|
5.9 |
|
|
|
5.6 |
|
|
|
6.3 |
|
|
Depreciation and amortization |
|
|
5.3 |
|
|
|
6.3 |
|
|
|
5.7 |
|
|
|
7.1 |
|
|
Restaurant opening |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
Loss on disposal and impairment of assets |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
Total costs and expenses |
|
|
99.0 |
|
|
|
97.7 |
|
|
|
100.7 |
|
|
|
100.3 |
|
|
Income (loss) from operations |
|
|
1.0 |
|
|
|
2.3 |
|
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(0.6 |
) |
|
Other (expense) income, net |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
0.1 |
|
|
Total other expense |
|
|
(0.2 |
) |
|
|
(0.6 |
) |
|
|
(0.3 |
) |
|
|
(0.5 |
) |
|
Income (loss) before income taxes |
|
|
0.8 |
|
|
|
1.7 |
|
|
|
(1.0 |
) |
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
0.7 |
|
|
|
(0.4 |
) |
|
|
(1.3 |
) |
|
|
(1.5 |
) |
|
Net income |
|
|
0.1 |
% |
|
|
2.2 |
% |
|
|
0.3 |
% |
|
|
0.6 |
% |
Thirteen Weeks Ended June 28, 2022 Compared to Thirteen Weeks Ended June 29, 2021
Revenues. Total revenues increased by $39.4 million, or 13.6%, to $329.7 million during the thirteen weeks ended June 28, 2022, from $290.3 million during the comparable thirteen week period of 2021. The increase in revenues primarily consisted of an 11.7%, or $33.5 million, increase in comparable restaurant sales and a $5.5 million increase in sales from new restaurants not yet in our comparable restaurant sales base. The increase in comparable restaurant sales was the result of an increase in guest traffic of approximately 7.8%, coupled with an increase in average check of approximately 3.9%, which was made up of approximately 6% in price increases and partially offset by changes in mix. The increase in guest traffic was primarily due to the re-opening of our dining rooms, which were closed or restricted in operation during the same period in 2021.
Cost of Sales. Cost of sales increased by $15.3 million, or 20.3%, to $90.9 million during the thirteen weeks ended June 28, 2022, from $75.6 million during the comparable thirteen week period of 2021. This increase was primarily due to the increase in revenue, commodity cost increases and costs related to our three new restaurants opened and one restaurant re-opened since the thirteen weeks ended June 29, 2021, offset by our Pasadena restaurant that was closed at the beginning of the current fiscal year. As a percentage of revenues, cost of sales increased to 27.6% for the current thirteen week period from 26.0% for the prior year comparable period. This increase was primarily due to inflationary pressure on food costs, partially mitigated by menu price increases.
Labor and Benefits. Labor and benefit costs for our restaurants increased by $18.9 million, or 18.1%, to $123.1 million during the thirteen weeks ended June 28, 2022, from $104.2 million during the comparable thirteen week period of 2021. This increase was primarily due to additional labor required to support increased revenue, an increase in the number of team members coupled with higher training and overtime costs and expenses related to the three new restaurants opened and one restaurant re-opened since the thirteen weeks ended June 29, 2021. Increases in labor and benefit costs were offset in part by the closure of our Pasadena restaurant at the beginning of the current fiscal year. As a percentage of revenues, labor and benefit costs increased to 37.3% for the current thirteen week period from 35.9% for the prior year comparable period. This increase was primarily due to higher wages, training and
13
overtime hours. Included in labor and benefits for the thirteen weeks ended June 28, 2022 and June 29, 2021, was approximately $0.6 million and $0.7 million, respectively, or 0.2% revenues, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.
Occupancy and Operating. Occupancy and operating expenses increased by $9.0 million, or 13.3%, to $76.6 million during the thirteen weeks ended June 28, 2022, from $67.6 million during the comparable thirteen week period of 2021. This increase was primarily due to higher merchant credit card fees as a result of increased revenues and increased supply costs, janitorial services, marketing expenses and costs related to the three new restaurants opened and one restaurant re-opened since the thirteen weeks ended June 29, 2021. As a percentage of revenues, occupancy and operating expenses decreased to 23.2% for the current thirteen week period from 23.3% for the prior year comparable period. This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base.
General and Administrative. General and administrative expenses decreased by $0.1 million, or 0.7%, to $16.9 million during the thirteen weeks ended June 28, 2022, from $17.0 million during the comparable thirteen week period of 2021. This change was primarily due to the decrease in the liability of our deferred compensation plan, offset by increased personnel costs. Included in general and administrative costs for the thirteen weeks ended June 28, 2022 and June 29, 2021, was approximately $1.6 million and $1.8 million, or 0.5% and 0.6% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 5.1% for the current thirteen week period from 5.9% for the prior year comparable period. This decrease was primarily due to our ability to leverage our fixed costs over a higher revenue base.
Depreciation and Amortization. Depreciation and amortization decreased by $0.7 million, or 3.7%, to $17.6 million during the thirteen weeks ended June 28, 2022, compared to $18.2 million during the comparable thirteen week period of 2021. This decrease was primarily related to impairment and disposal charges taken in fiscal 2021, including the impairment and reduction of carrying value related to our Pasadena restaurant that closed at the beginning of the year. The decrease in depreciation and amortization was partially offset by depreciation expense related to our restaurants opened since the thirteen weeks ended June 29, 2021. As a percentage of revenues, depreciation and amortization decreased to 5.3% for the current thirteen week period from 6.3% for the prior year comparable period. This decrease was primarily due to a higher revenue base.
Restaurant Opening. Restaurant opening expense increased by $0.3 million, or 44.9%, to $1.0 million during the thirteen weeks ended June 28, 2022, compared to $0.7 million during the comparable thirteen week period of 2021. This increase was primarily due to the timing of openings.
Loss on Disposal and Impairment of Assets. Loss on disposal and impairment of assets was $0.4 million during the thirteen weeks ended June 28, 2022, and $0.3 million during the comparable thirteen week period of 2021. These costs primarily relate to disposals of assets in conjunction with initiatives to keep our restaurants up to date.
Interest Expense, Net. Interest expense, net, decreased by $1.2 million to $0.4 million during the thirteen weeks ended June 28, 2022, compared to $1.6 million during the comparable thirteen week period of 2021. This decrease was primarily due to a lower average debt balance during the thirteen weeks ended June 28, 2022, compared to the comparable thirteen week period of 2021.
Other (Expense) Income, Net. Other (expense) income, net, was $0.2 million of expense during the thirteen weeks ended June 28, 2022. This was primarily related to the loss associated with the cash surrender value of certain life insurance policies under our deferred compensation plan. This loss offsets the related deferred compensation expense impact included within “General and administrative” expenses on our Unaudited Consolidated Statements of Operations. The increased loss related to the cash surrender value of certain life insurance policies was partially offset by an insurance reimbursement related to business interruptions due to civil unrest coupled with compensation from the city related to a partial parking lot closure at one of our restaurants.
Income Tax Expense (Benefit). Our effective income tax rate for the thirteen weeks ended June 28, 2022, reflected an 88.2% tax expense compared to a 25.6% tax benefit for the comparable thirteen week period of 2021. The effective tax rate for the thirteen weeks ended June 28, 2022 and June 29, 2021, was different than the statutory tax rate primarily due to FICA tax tip credits and its relationship to pre-tax earnings.
Twenty-Six Weeks Ended June 28, 2022 Compared to Twenty-Six Weeks Ended June 29, 2021
Revenues. Total revenues increased by $114.8 million, or 22.4%, to $628.4 million during the twenty-six weeks ended June 28, 2022, from $513.6 million during the comparable twenty-six week period of 2021. The increase in revenues primarily consisted of a 21.3%, or $107.5 million, increase in comparable restaurant sales, and an $8.4 million increase in sales from new restaurants not yet in our comparable restaurant sales base. Revenue increases were primarily offset by a $1.4 million decrease related to the closure of our Pasadena restaurant. The increase in comparable restaurant sales was the result of an increase in guest traffic of approximately 16.1%, coupled with an increase in average check of approximately 5.2%, which was made up of approximately 6% in price increases and partially offset by changes in mix. The increase in guest traffic was primarily due to the re-opening of our dining rooms, which were closed or restricted in operation during the same period in 2021.
14
Cost of Sales. Cost of sales increased by $40.7 million, or 30.9%, to $172.4 million during the twenty-six weeks ended June 28, 2022, from $131.7 million during the comparable twenty-six week period of 2021. This increase was primarily due to the increase in revenue, commodity cost increases and costs related to our three new restaurants opened and one restaurant re-opened since the twenty-six weeks ended June 29, 2021, offset by our Pasadena restaurant that was closed at the beginning of the current fiscal year. As a percentage of revenues, cost of sales increased to 27.4% for the current twenty-six week period from 25.6% for the prior year comparable period. This increase was primarily due to inflationary pressure on food costs, partially mitigated by menu price increases.
Labor and Benefits. Labor and benefit costs for our restaurants increased by $53.5 million, or 28.8%, to $239.4 million during the twenty-six weeks ended June 28, 2022, from $185.9 million during the comparable twenty-six week period of 2021. This increase was primarily due to increased team members and higher training and overtime costs due to the re-opening of our dining rooms, which were closed or had restricted operations during a portion of the same period in 2021, and expenses related to the three new restaurants opened and one restaurant re-opened since the twenty-six weeks ended June 29, 2021. Increases in labor and benefit costs were offset in part by the closure of our Pasadena restaurant at the beginning of the current fiscal year. As a percentage of revenues, labor and benefit costs increased to 38.1% for the current twenty-six week period from 36.2% for the prior year comparable period. This increase was primarily due to higher wages, training and overtime hours due to increased hiring activities, and the deleveraging impact from the COVID-19 Omicron wave in January 2022 when sales were severely impacted. Included in labor and benefits for the twenty-six weeks ended June 28, 2022 and June 29, 2021, was approximately $1.4 million and $1.5 million, or 0.2% and 0.3% of revenues, respectively, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.
Occupancy and Operating. Occupancy and operating expenses increased by $20.9 million, or 16.4%, to $148.3 million during the twenty-six weeks ended June 28, 2022, from $127.4 million during the comparable twenty-six week period of 2021. This increase was primarily due to higher merchant credit card fees, supply costs, janitorial services related to the re-opening of our dining rooms, coupled with increased marketing costs and costs related to the three new restaurants opened and one restaurant re-opened since the twenty-six weeks ended June 29, 2021. As a percentage of revenues, occupancy and operating expenses decreased to 23.6% for the current twenty-six week period from 24.8% for the prior year comparable period. This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base.
General and Administrative. General and administrative expenses increased by $2.9 million, or 8.9%, to $35.2 million during the twenty-six weeks ended June 28, 2022, from $32.3 million during the comparable twenty-six week period of 2021. This increase was primarily due to increases in personnel, travel, recruiting and outside services as we returned closer to pre-pandemic operations and have invested in growth initiatives, offset by the decrease in the liability of our deferred compensation plan. Included in general and administrative costs for the twenty-six weeks ended June 28, 2022 and June 29, 2021, was approximately $3.6 million and $3.5 million, or 0.6% and 0.7% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 5.6% for the current twenty-six week period from 6.3% for the prior year comparable period. This decrease was primarily due to our ability to leverage our fixed costs over a higher revenue base.
Depreciation and Amortization. Depreciation and amortization decreased by $0.9 million, or 2.5%, to $35.5 million during the twenty-six weeks ended June 28, 2022, compared to $36.4 million during the comparable twenty-six week period of 2021. This decrease was primarily related to impairment and disposal charges taken in fiscal 2021, including the impairment and reduction of carrying value related to our Pasadena restaurant that closed at the beginning of the year. The decrease in depreciation and amortization was partially offset by depreciation expense related to our three new restaurants opened since the twenty-six weeks ended June 29, 2021. As a percentage of revenues, depreciation and amortization decreased to 5.7% for the current twenty-six week period from 7.1% for the prior year comparable period. This decrease was primarily due to a higher revenue base.
Restaurant Opening. Restaurant opening expense increased by $0.8 million, or 91.5%, to $1.6 million during the twenty-six weeks ended June 28, 2022, compared to $0.8 million during the comparable twenty-six week period of 2021. This increase was primarily due to the timing of our openings. We opened three new restaurants during the twenty-six weeks ended June 28, 2022, compared to two new restaurants during the twenty-six weeks ended June 29, 2021.
Loss on Disposal and Impairment of Assets. Loss on disposal and impairment of assets was $0.6 million during the twenty-six weeks ended June 28, 2022, and $0.5 million during the comparable twenty-six week period of 2021. These costs primarily relate to disposals of assets in conjunction with initiatives to keep our restaurants up to date.
Interest Expense, Net. Interest expense, net, decreased by $1.9 million to $1.1 million during the twenty-six weeks ended June 28, 2022, compared to $3.0 million during the comparable twenty-six week period of 2021. This decrease was primarily due to a lower average debt balance during the twenty-six weeks ended June 28, 2022, compared to the comparable twenty-six week period of 2021.
Other (Expense) Income, Net. Other (expense) income, net, increased by $0.9 million to $0.6 million of expense during the twenty-six weeks ended June 28, 2022, compared to $0.3 million of income during the comparable twenty-six week period of 2021. This was primarily related to the loss associated with the cash surrender value of certain life insurance policies under our deferred compensation plan. This loss offsets the related deferred compensation expense impact included within “General and administrative” expenses on our Unaudited Consolidated Statements of Operations. The increased loss related to the cash surrender value of certain life insurance
15
policies was partially offset by an insurance reimbursement related to business interruptions due to civil unrest and compensation from the city related to a partial parking lot closure at one of our restaurants.
Income Tax Benefit. Our effective income tax rate for the twenty-six weeks ended June 28, 2022, reflected a 128.4% tax benefit compared to a 176.2% tax benefit for the comparable twenty-six week period of 2021. The effective tax rate benefit for the twenty-six weeks ended June 28, 2022 and June 29, 2021, was different than the statutory tax rate primarily due to FICA tax tip credits and its relationship to pre-tax earnings.
LIQUIDITY AND MATERIAL CASH REQUIREMENTS
The following table provides, for the periods indicated, a summary of our key liquidity measurements (dollars in thousands):
|
|
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
37,761 |
|
|
$ |
38,527 |
|
|
Net working capital |
|
$ |
(109,995 |
) |
|
$ |
(109,619 |
) |
|
Current ratio |
|
0.4:1.0 |
|
|
0.5:1.0 |
|
||
As a result of uncertainties in the near-term macro environment caused by the COVID-19 pandemic, including supply chain challenges, and commodity and labor inflation, we continue to focus on cash flow generation and maintaining a solid and flexible financial position to execute our long term strategy of investing in our business and opening new restaurants. We continue to monitor the macro environment and will adjust our overall approach to capital allocation, including share repurchases and dividends, as the post-pandemic recovery unfolds.
We are taking what we believe to be reasonably necessary and appropriate measures to control costs and maximize liquidity. Based on the current level of operations, we believe that our current cash and cash equivalents will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.
Similar to many restaurant chains, we typically utilize operating lease arrangements (principally ground leases) for the majority of our restaurant locations. We believe our operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner. However, we are not limited to the use of lease arrangements as our only method of opening new restaurants and from time to time have purchased the underlying land for new restaurants. We typically lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements. Our rent structures vary from lease to lease, but generally provide for the payment of both minimum and contingent (percentage) rent based on sales, as well as other expenses related to the leases (for example, our pro-rata share of common area maintenance, property tax and insurance expenses). Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. There can be no assurance that such allowances will be available to us on each project. From time to time, we may also decide to purchase the underlying land for a new restaurant if that is the only way to secure a highly desirable site. Currently, we own the underlying land for one of our restaurants that will be opened in fiscal 2022 and our Texas brewpub locations. We also own two parcels of land adjacent to two of our restaurants. It is not our current strategy to own a large number of land parcels that underlie our restaurants. Therefore, in many cases we have subsequently entered into sale-leaseback arrangements for land parcels that we previously purchased. We disburse cash for certain site-related work, buildings, leasehold improvements, furnishings, fixtures and equipment to build our leased and owned premises. We own substantially all of the equipment, furniture and trade fixtures in our restaurants and currently plan to do so in the future.
CASH FLOWS
The following tables set forth, for the periods indicated, our cash flows from operating, investing, and financing activities (in thousands):
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
Net cash provided by operating activities |
|
$ |
30,212 |
|
|
$ |
53,498 |
|
|
Net cash used in investing activities |
|
|
(30,553 |
) |
|
|
(14,270 |
) |
|
Net cash used in financing activities |
|
|
(425 |
) |
|
|
(2,917 |
) |
|
Net (decrease) increase in cash and cash equivalents |
|
$ |
(766 |
) |
|
$ |
36,311 |
|
Operating Cash Flows
Net cash provided by operating activities was $30.2 million during the twenty-six weeks ended June 28, 2022, representing a $23.3 million decrease from the $53.5 million provided by during the twenty-six weeks ended June 29, 2021. The decrease over the prior year is
16
primarily due to the payment timing of accounts payable and accrued expenses, offset by the collection of accounts and other receivable during the twenty-six weeks ended June 29, 2021.
Investing Cash Flows
Net cash used in investing activities was $30.6 million during the twenty-six weeks ended June 28, 2022, representing a $16.3 million increase from the $14.3 million used during the twenty-six weeks ended June 29, 2021. The increase over prior year is primarily due to an increase in the number of new restaurant openings, new restaurants under construction and key productivity initiatives.
The following table provides, for the periods indicated, the components of capital expenditures (in thousands):
|
|
|
For the Twenty-Six Weeks Ended |
|
|||||
|
|
|
|
|
|
||||
|
New restaurants |
|
$ |
18,168 |
|
|
$ |
7,662 |
|
|
Restaurant maintenance and key productivity initiatives |
|
|
11,899 |
|
|
|
5,585 |
|
|
Restaurant and corporate systems |
|
|
1,052 |
|
|
|
1,044 |
|
|
Total capital expenditures |
|
$ |
31,119 |
|
|
$ |
14,291 |
|
As of August 1, 2022, we have opened three new restaurants and closed our Pasadena restaurant during fiscal 2022. We currently plan to open as many as eight restaurants in fiscal 2022, and we have entered into signed leases, land purchase agreements or letters of intent for all of our 2022 new restaurant locations. Our new restaurant unit economics continue to warrant an appropriate allocation of our available capital, and we will continue to balance new restaurant growth with quality and hospitality.
We currently anticipate our total capital expenditures for fiscal 2022 to be approximately $90 million to $95 million. This estimate includes costs to open up to eight new restaurants and remodel several existing locations. Total capital expenditures exclude anticipated proceeds from tenant improvement allowances and sale-leasebacks. We expect to fund our net capital expenditures with our current cash balance on hand, cash flows from operations and our line of credit. Our future cash requirements will depend on many factors, including the pace of our expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords.
Financing Cash Flows
Net cash used in financing activities was $0.4 million during the twenty-six weeks ended June 28, 2022, representing a $2.5 million decrease from the $2.9 million used during the twenty-six weeks ended June 29, 2021. This decrease was primarily due to proceeds from the issuance of common stock and stock option exercises during the twenty-six weeks ended June 29, 2021, offset by higher payments on our line of credit.
OFF-BALANCE SHEET ARRANGEMENTS
We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of June 28, 2022, we are not involved in any off-balance sheet arrangements.
IMPACT OF INFLATION
Our country is currently experiencing multi-decade high inflation. Inflation on food, labor, energy and occupancy and operating costs is currently impacting the profitability of our restaurant operations compared to historical trends. Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the cost of key operating resources, including food and other raw materials, labor, energy and other supplies and services. While we have taken steps to enter into agreements for some of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather or other market conditions outside of our control. We are currently unable to contract for certain commodities, such as fluid dairy, fresh meat or seafood, and most fresh produce items, for long periods of time. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations. While we have not had material disruptions in our supply chain, we have experienced some product shortages and higher costs for many of our commodities.
A general shortage in the availability of qualified restaurant managers and hourly workers in certain geographic areas in which we operate, which has been exacerbated by continuing effects of the COVID-19 pandemic on the labor market, has caused increases in the costs of recruiting and compensating such team members. Many of our restaurant team members are paid hourly rates subject to federal, state or local minimum wage requirements. Numerous state and local governments have their own minimum wage and other regulatory requirements for team members that are generally greater than the federal minimum wage and are subject to annual increases based on changes in their local consumer price indices. Additionally, certain operating and other costs, including health
17
benefits in compliance with the Patient Protection and Affordable Care Act, taxes, insurance, COVID-19 pandemic related benefits, and other outside services continue to increase with the general level of inflation and may also be subject to other cost and supply fluctuations outside of our control.
While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices of our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future. From time to time, competitive conditions will limit our menu pricing flexibility. In addition, macroeconomic conditions that impact consumer discretionary spending for food away from home could make additional menu price increases imprudent. There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns. Many of the leases for our restaurants provide for contingent rent obligations based on a percentage of sales. As a result, rent expense will absorb a proportionate share of any menu price increases in our restaurants. There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.
SEASONALITY AND ADVERSE WEATHER
Our business is impacted by weather and other seasonal factors that typically impact other restaurant operations. Holidays (and shifts in the holiday calendar) and severe weather including hurricanes, tornados, thunderstorms, snow and ice storms, prolonged extreme temperatures and similar conditions may impact restaurant sales volumes in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales. Quarterly results have been and will continue to be significantly impacted by the timing of new restaurant openings and their associated restaurant opening expenses. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.
A summary of our other critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 28, 2021. During the twenty-six weeks ended June 28, 2022, there were no significant changes in our critical accounting policies.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion of market risks contains “forward-looking” statements. Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets.
Interest Rate Risk
We have a $215 million Credit Facility, of which $50.0 million is currently outstanding and carries interest at a floating rate. We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced share repurchase program, and for working capital and construction requirements, as needed. We are exposed to interest rate risk through fluctuations in interest rates on our obligations under the Credit Facility. Based on our current outstanding balance, a hypothetical 1% change in the interest rates under our Credit Facility would have an approximate $0.4 million annual impact on our net income.
Food, Supplies and Commodity Price Risks
We purchase food, supplies and other commodities for use in our operations based upon market prices established with our suppliers. Our business is dependent on frequent and consistent deliveries of these items. We may experience shortages, delays or interruptions due to inclement weather, natural disasters, labor issues or other operational disruptions or other conditions beyond our control such as cyber breaches or ransomware attacks at our suppliers, distributors or transportation providers. Additionally, many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control, whether contracted for or not. Costs can also fluctuate due to government regulation. As a result of the COVID-19 pandemic, we have experienced and expect to continue to experience distribution disruptions, commodity cost inflation and certain food and supply shortages. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity
18
requirements. However, it may not be possible for us to enter into fixed-price contracts for certain commodities or we may choose not to enter into fixed-price contracts for certain commodities. We believe that substantially all of our food and supplies are available from several sources, which helps to diversify our overall commodity cost risk. We also believe that we have some flexibility and ability to increase certain menu prices, or vary certain menu items offered or promoted, in response to food commodity price increases. Some of our commodity purchase arrangements may contain contractual features that limit the price paid by establishing certain price floors or caps. We do not use financial instruments to hedge commodity prices, since our purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate cost that we pay.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934 as amended, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 28, 2022, our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our second fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
19
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 8 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for a summary of legal proceedings.
Item 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 28, 2021.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
As of June 28, 2022, we have cumulatively repurchased shares valued at approximately $475.6 million in accordance with our approved share repurchase plan. We did not repurchase shares during the twenty-six weeks ended June 28, 2022. As of June 28, 2022, we have approximately $24.4 million available under our share repurchase plan.
20
Item 6. EXHIBITS
|
Exhibit |
|
Description |
|
3.1 |
|
|
|
|
|
|
|
3.2 |
|
|
|
|
|
|
|
3.3 |
|
|
|
|
|
|
|
3.4 |
|
|
|
|
|
|
|
4.1 |
|
|
|
|
|
|
|
10.1 |
|
|
|
|
|
|
|
31 |
|
Section 302 Certification of Chief Executive Officer and Chief Financial Officer. |
|
|
|
|
|
32 |
|
Section 906 Certification of Chief Executive Officer and Chief Financial Officer. |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema |
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase |
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase |
|
101.LAB |
|
Inline XBRL Taxonomy Extension Labels Linkbase |
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase |
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
21
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
BJ’S RESTAURANTS, INC. |
|
|
|
|
(Registrant) |
|
|
|
By: |
/s/ GREGORY S. LEVIN |
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer and President |
|
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
By: |
/s/ THOMAS A. HOUDEK |
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
|
|
|
(Principal Financial Officer) |
|
|
|
|
By: |
/s/ JACOB J. GUILD |
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and Chief Accounting Officer |
|
|
|
|
|
(Principal Accounting Officer) |
|
22
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 11/3/26 | ||||
| Filed on: | 8/1/22 | |||
| 7/29/22 | ||||
| For Period end: | 6/28/22 | |||
| 3/29/22 | 10-Q | |||
| 12/28/21 | 10-K | |||
| 11/3/21 | 8-K | |||
| 6/29/21 | 10-Q | |||
| 3/30/21 | 10-Q | |||
| 1/21/21 | 8-K | |||
| 1/15/21 | 4, 8-K | |||
| 12/29/20 | 10-K | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/27/24 BJs RESTAURANTS Inc. 10-K 1/02/24 73:9.6M Donnelley … Solutions/FA 2/28/23 BJs RESTAURANTS Inc. 10-K 1/03/23 79:13M Donnelley … Solutions/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/14/20 BJs RESTAURANTS Inc. 8-K:5,8,9 8/14/20 13:372K Globenewswire Inc./FA 2/26/18 BJs RESTAURANTS Inc. 10-K 1/02/18 76:11M ActiveDisclosure/FA 3/09/11 BJs RESTAURANTS Inc. 10-K 12/28/10 8:1.1M Donnelley … Solutions/FA 3/15/05 BJs RESTAURANTS Inc. 10-K 1/02/05 9:908K Donnelley … Solutions/FA 8/22/96 BJs RESTAURANTS Inc. SB-2/A 8:798K Toppan Merrill-FA2/FA |